Why is the IMF Chief Almost Always French?

July 5, 2011

When Christine Lagarde was named the new IMF managing director last Tuesday, the announcement came as little surprise to many of those who had been paying attention to the selection process. Lagarde had long been considered the front-runner in the race to replace the embattled Dominique Strauss-Kahn, who, of course, stepped down in May following accusations of sexual assault. But if few would doubt Lagarde’s credentials—she is a high-ranking economic minister in France and held other cabinet positions prior to the Sarkozy administration—some have begun to question France’s long-standing dominance over the IMF. When Lagarde takes over this week she will become the fifth IMF chief from France and just the eleventh appointed IMF chief ever, which raises the obvious question: Who, or what, made France the hegemon?

The IMF was founded, alongside the World Bank, as a result of the Bretton Woods conference in 1944. A gentleman’s agreement stemming from the founding meetings—at which the only European representation was British—holds that an American will always occupy the top spot of the World Bank, while a European will lead the IMF. But as for why the French appear to dominate this European designated post, the experts I talked to appeared divided.

Jeffrey Frankel, a Harvard Kennedy School professor who has consulted for the IMF and World Bank, explained that France’s persistent leadership may be because the country is just the most, well, European. “This is a gross nationalistic stereotype, what we say we should get away from, but [the thinking is that] it should be a European, and the Brits aren’t really European, they’re too close to the Americans, so they can’t represent Europe,” he told me. “Germans? It’s too close to World War Two. Italy isn’t really trustworthy on economics.” That leaves France, owner of Europe’s second-largest economy (behind Germany), one of its most populous states, and host to a proud tradition of prominent economic and political schools, the Grandes Ecoles.

Dani Rodrik, one of Frankel’s colleagues at Harvard, has a slightly different perspective, however. He contends that, quite often, the French have ruled because the French options have simply been the better ones. “The French have a great tradition of public service associated with the French treasury who have gone on to bigger and better things in international multilateral organizations, so I would say the pipeline is fairly large, between the influence of the Grandes Ecoles and the traditional public service in France, which is much stronger than the other countries’s,” he explains.

Rodrik told me that it also makes sense for the IMF leader to be either French or German given the size of those countries’s economies and influence. However, “German central banking tradition has been much more narrowly monetarist,” he says. “It’s hard to think of the same stream of lots of candidates coming from there, but this is probably more after the fact, trying to fit this theory … [but] I don’t think there’s a conspiracy.”

For former IMF research department assistant director and current Center for Global Development fellow Arvind Subramanian, though, the truth lies in a combination of these reasons. “I think there are two fundamental reasons why the French have a disproportionate share,” he explained. “One is that, in the first push for European integration, the French played a leading role. France was always in the vanguard of pushing for European integration, and therefore in the vanguard of European leadership …. The second, equally important reason,” he continued, “was that the French have always had this tradition of a very competent elite bureaucracy and bureaucrats.”

Citing the French leadership of the World Trade Organization and similar organizations, Subramanian explained that the country’s economic leadership is long-standing and widespread, and that other countries have not caught up. “The system of the elite bureaucracy is quite distinctively French,” he told me. “It has historical reasons going back to Napoleon. Germany has never had that strong tradition, the United Kingdom has a traditionally very strong civil service, but they never enjoyed the complete trust. Their European credentials were always suspect.”

As far as the future is concerned, however, Rodrik maintains that the European leaders don’t absolutely have to be French. “There’s always been a more obvious French candidate,” he says of previous IMF director candidates. “If there was a candidate from Germany, or even Italy, today, of the stature of Lagarde, I’m not sure that person wouldn’t be sitting on that chair today.”

But Frankel says this possibility—and others like it—would likely not go over well in France. “Most countries want their own nationals in these positions, [but] the French are just fanatic about it,” he told me, explaining what the reaction would be if France were to lose the IMF or European Central Bank (which is currently led by Jean-Claude Trichet, former president of the Banque de France). “When there’s a slight risk that the board of the European Central Bank might not have a Frenchman on it, well ….” His voice trailed off.